HC Deb 10 July 2003 vol 408 cc1363-5
8. Bob Russell (Colchester)

What plans he has to reduce value added tax on residential conversion works to existing buildings.[124649]

The Economic Secretary to the Treasury (John Healey)

The Government have already reduced the VAT on most types of residential conversion work to the lowest rate permissible under the European Community VAT rules, but we will continue to keep the VAT treatment of that and other types of construction work under review.

Bob Russell

I welcome the progress that has been made, but I am sure that the Minister knows of English Heritage's campaign for 5 per cent. VAT throughout the building industry, for new build and established buildings. Why do the Government refuse to follow the advice and recommendation of English Heritage?

John Healey

I am aware of English Heritage's campaign, about which several hon. Members have contacted me recently. Creating a flat rate of VAT for all building work, for which English Heritage argues, would mean that we would have no option but to give up our zero rates, including on new charity buildings and new housing. I understand the argument that a VAT level playing field for all sorts of construction would encourage the repair of existing properties as opposed to the building of new ones. We will continue to keep those matters under review. We have undertaken to consider English Heritage's representations and several others in the context of a current European Commission review of the reduced rates rules at European level.

Mr. Peter Pike (Burnley)

Despite our welcome actions, does my hon. Friend believe that we have done enough for areas such as Burnley, which has 4,500 empty houses? We need to do more in the housing pathfinder renewal areas because although we might need to demolish 2,000 houses, the cost of converting two into one and other schemes to save some others is expensive. We need more Government assistance to make the options viable.

John Healey

I understand my hon. Friend's point. Most conversions of residential properties have been done at a reduced rate of VAT since 2001. That is also true of non-residential buildings, about which my hon. Friend is concerned, and conversion work to increase the number of residential units in existing buildings. The additional support for which he rightly argues in some of our most disadvantaged areas can come from beyond the VAT regime. We are providing for precisely that, especially in the 2,000 most disadvantaged wards in the UK. We are designating them as enterprise areas.

Sir Patrick Cormack (South Staffordshire)

Is the hon. Gentleman aware that the English Heritage campaign has strong support from the all-party arts and heritage group, which has some 300 members from all parties in both Houses? May I draw his attention in particular to the problems faced by historic churches and by those charged with their repair?

John Healey

I am aware of the support from the all-party group, and of the hon. Gentleman's support in particular. He has spoken personally to me about this matter, and I know of his work on the all-party group. All that I can say to him is that we are willing to consider proposals for new reduced rates in the context of the current European Commission review. We have received representations on proposals for reduced rates for a wide range of items, from bicycles and compact discs to restaurants and houseboats. We shall consider them all carefully, but they will be considered in the round, and in the context that I have just mentioned.